Kelly Sullivan/Getty Images for the WeWork Creator Awards
WeWork cofounder Adam Neumann would see a $200 million payout under a takeover deal proposed by SoftBank.
WeWork cofounder and chairman Adam Neumann would see around a $200 million windfall as part of SoftBank's proposed deal to take over his troubled company, a source familiar with the negotiations told Business Insider.
As part of the agreement, Neumann would give up his seat on WeWork's board and his voting shares, the source said. Axios' Dan Primack previously reported the news, adding that one of the conditions of the agreement is that Neumann support SoftBank's bid for the commercial real-estate giant.
Transform talent with learning that worksCapability development is critical for businesses who want to push the envelope of innovation.Discover how business leaders are strategizing around building talent capabilities and empowering employee transformation.Know More A WeWork representative declined to comment. SoftBank representatives did not immediately respond to a call seeking comment.
SoftBank was due to submit a proposal to WeWork's board on Monday. The coworking company's directors are expected to meet Tuesday to review it, as well as a competing proposal that's expected from JPMorgan.
Both proposals would value WeWork at $8 billion or less - a far cry from the $47 billion valuation it garnered from SoftBank in a funding round in January. But WeWork was left scrambling after its planned initial public offering fell through in the wake of massive resistance from potential investors. The company reportedly could run out of cash within a month without a new round of funding.
Read this: WeWork is set to evaluate rescue proposals from SoftBank and JPMorgan on Tuesday
Neumann's financial condition remains uncertain
As large as the $200 million payout is, it's almost certainly a small fraction of what Neumann likely would have seen had WeWork's IPO gone through, given his sizable stake in the company.
It's also unclear how the payout will affect Neumann's overall financial condition. According to WeWork's IPO paperwork, he had borrowed some $380 million from a collection of lenders, including JPMorgan, using his WeWork shares as collateral. Recent reports have suggested that the banks might be forced to issue a margin call to Neumann; essentially requiring him to put up more collateral due to the decline in the value of his shares.
SoftBank's deal to remove Neumann would complete his precipitous fall. When WeWork filed for its IPO, Neumann was CEO and held majority control of the company with 20 votes per share. He was later forced to step down as CEO and agreed to reduce his votes to just three per share.
Neumann was the focus of much of the pushback from potential investors, and reportedly from SoftBank also. He and his family members were involved in a series of transactions with the company that raised eyebrows, as did reports about him partying and using drugs.
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